The Gainesville City Commission will take a final vote on November’s ballot initiative and review the budget for the next fiscal year at a Tuesday special meeting.
In preparation for the meeting, City Manager Cynthia Curry sent an email that recapped changes in the general services contribution (GSC) over the past three years. Curry emphasized the role of a GSC in city governments and said that general government disagrees with how Gainesville Regional Utilities (GRU) has arrived at certain revenue figures.
“A narrative has emerged from the GRU Authority Board that suggests the transfer has been used to give the city more money than the utility earned,” Curry said in the email. “Specifically, this analysis undertakes to illustrate that the utility ‘overpaid’ the City of Gainesville by $68 million over the course of several years. Although GRU has claimed this figure is ‘verified,’ that verification comes only from GRU.”
She said the Gainesville City Commission would hear more on the issue at Tuesday’s meeting, and backup documents show an analysis of GRU’s earnings over the past several years.
The $68 million figure has been used by opponents of City Commission control of GRU, arguing that the number proves fiscal mismanagement over the years. State Rep. Chuck Clemons, R-Newberry, used the number in March 2023 based on a state auditor’s report.
At the GRU Authority’s May 29 meeting, then Chair Ed Bielarski, who also served as general manager of the utility for seven years, brought up the $68 million figure again.
Mark Benton, GRU’s director of accounting and finance, confirmed the figure.
Benton said staff pulled the numbers and found that the GSC transfer sent 95% of GRU’s revenue to the general government since 2002.
Authority Board Member Eric Lawson summed up the GRU position.
“When you compare where [the GSC] is today compared to other organizations, it is lower and it is appropriately lower because of the debt load that we cover,” Lawson said.
He said the GRU Authority should move forward with the lower transfer and not worry about past payments. But other Authority members said the utility should recoup the $68 million that was overpaid to the general government from 2018 through 2023.
General government has disagreed with how GRU has calculated the $68 million number, and Steve Varvel, director for Gainesville’s office of management and budget, told the GRU Authority at a meeting that the city has also asked for clarity on how the IT services costs were calculated.
“It is important to state the utility’s financial data can be analyzed in a number of ways,” Curry said in the email.
A motion passed last week directed GRU staff to keep the GSC flat at $15.3 million but remove $6.8 million each year for the next decade to get that money back. The annual transfer would then be around $8.5 million—though the GRU Authority will need to vote on this transfer amount each year.
Curry mentioned this plan in her email. She said the city has a responsibility to provide services at an acceptable level and added that a municipal utility provides a crucial source of funding.
The City Commission will also vote on a November ballot initiative that will ask voters if they want to keep Section 7 of the Gainesville Charter. That section created the GRU Authority, and the referendum, if passed, would place control of the utility under general government again.
Bielarski responded to Curry’s email and stated:
“The email Gainesville City Manager Cynthia Curry sent today about the city’s fiscal year 2025 budget is a perfect illustration of why GRU needs to operate under an independent authority. This is the latest in a series of communications that weaponizes the annual multi-million-dollar transfer GRU makes to the city’s general fund, including threating that a reduction will cause the city to cut fire and police services. The $68 million overpayment the email dismisses is based on generally accepted accounting principles rather than a nuanced calculation no other municipal utility uses as a proxy for transfers.
“Ultimately, all these communications accomplish is to further vilify GRU’s employees by contributing to the narrative that GRU is a bad actor. Even more confounding is that GRU is a department of the city, albeit one overseen by an independent board. This kind of rhetoric has for years worsened GRU’s reputation and should cease immediately for the good of both our employees and customers.”
Editor’s note: This story was updated with comments from Ed Bielarski.
I’d like to respond to Mgr. Curry’s email, too (my bulleted questions to her quoted prose):
City vs. GRU on budget shortfall…
“Although we face challenges, it is helpful to pause a moment and look back at how far we have come. In the past three years, the City of Gainesville has gone from receiving a Government Services Contribution (GSC) from Gainesville Regional Utilities (GRU) of $38 million in Fiscal Year 2021, to $36 million in Fiscal Year 2022, to $34 million in Fiscal Year 2023, to just $15.3 million in Fiscal Year 2024. That substantial downward adjustment eliminated approximately 10 percent of our budgeted General Fund revenue.”
* why are there revenue “challenges” after years of building luxury student apartment high rises? I know some get tax breaks, but is it for 100% of tax liabilities? Still, those high rises are big new GRU ratepayers, so hasn’t that helped?
“It is important to note the traditional role of a municipal utility includes serving as a crucial source of funding for its community. That is true across the country. It is why a transfer is part of the shared history of the city and utility, providing supplemental funding for public services such as infrastructure maintenance, fire and police protection, and parks and recreational facilities.”
* Do other cities with municipal utilities have biomass plants and related debt burdens? Would converting GRU to a cooperative help, thru a sale or merger?
“We are a city with a responsibility to its citizenry to provide these services at an acceptable level. The contention that the City of Gainesville should receive no funds from its municipal utility contradicts the purpose of a public utility and goes against standard industry practice.”
* I thought the purpose of a municipal utility was to keep rates down, not susceptible to profiteering owners? Plus, GRU is still willing to pay $millions per year, just not as much.
“The only way to deal with that reality is to face it head on. We are developing a budget proposal for Fiscal Year 2025 that recognizes this fundamental change at the heart of the city’s longstanding relationship with its utility.”
* Then cut trendy extras added in the years since the biomass plant was bought. And stop telling GPD, ACSD, and the courts to be lax on behavioral/criminal repeat offenders … so more taxpayers will move here, pay taxes and GRU bills.
“The Fiscal Year 2025 annual budget, still under development, hovers around $155 million. We are building on a three-year pattern of sound fiscal decisions, stabilizing even as we anticipate a further reduction of $6.8 million to the GSC that lowers it from $15.3 million to $8.5 million in Fiscal Year 2025.”
* Why hasn’t other real estate inflation increased property tax revenues enough, so GRU isn’t only source of budget growth?
“A narrative has emerged from the GRU Authority Board that suggests the transfer has been used to give the city more money than the utility earned. Specifically, this analysis undertakes to illustrate that the utility “overpaid” the City of Gainesville by $68 million over the course of several years. Although GRU has claimed this figure is “verified,” that verification comes only from GRU.”
* Maybe it’s in excess of GRU’s actual profits, that’s why?
Such a shame. Curry, the Mayor just don’t get it. They can pass all the feel good legislation they want to, GRU is no longer their cash cow.
Cut out the wasteful spending is a start. But this will never happen as the commission feels they are worth more than their checks.
Get out and VOTE folks!
I can’t tell which this reminds me of more, the joke about 3 blind men describing an elephant from different locations on the animal, or the idiom about lies, darned lies and statistics.
But, it certainly is proof positive that schools need to teach about rhetoric and logic as much as accounting.
If GRU was a “for profit entity” what would their tax burden be?
That amount should be the upper limit of the transfer.
If debt service is crippling the utility then decrease the yearly transfer by a negotiated amount, targeted to debt reduction.
I’d like to pay off my mortgage and cut expenses now but not if it leaves me broke, with deferred maintenance and a hiccup from destitution.
Lawson is taking the reasonable approach. Hot headed Belarski always ends up in a pissing contest that usually hurts everyone involved. Sycophantic authority members isn’t a remedy, it’s catastrophe.
Do no harm please!